Healthcare Sector Comment – July 2014

Dato

A key trend we’ve been following at Clearwater International is medical device companies joining forces in response to the US government’s healthcare reform. Companies have been concerned by hospitals’ and clinics’ moves to cut costs, pool orders and establish purchasing groups – and have been undertaking M&A activity to broaden their offering. Last month saw the announcement that Medtronic, the US medical device maker, is to buy Irish medical technology company Covidien in a €31.6bn deal. We will continue to see scale-driven acquisitions of this kind to help improve medical device companies’ negotiation powers, as they can offer bundled packages to purchasing groups.

The deal also marks the latest attempt at “inversion”, where US companies use a merger to move to countries with lower corporate tax rates. By relocating its headquarters to Ireland, Medtronic can benefit from the 12.5% corporate tax rate, which can reach up to 35% in the US – among the world’s highest rates. We will see a continued trend in these type of deals in the short term before the US Congress crack down on tax inversions through tax policy.

Also last month, it was announced that Partnerships in Care (PiC) will be acquired by Acadia Healthcare Company Inc, the NASDAQ-listed inpatient behavioural health care provider, for approximately €485m. PiC is the second largest provider of secure and step-down care across the UK, operating 23 hospitals with more than 1,230 beds for individuals with a mental illness, personality disorder, learning disability, acquired brain injury or autistic spectrum disorder. The acquisition will mean that PiC will be able to expand and diversify their portfolio to offer patients genuine choice across the care pathway of mental health.

 

Health & Social Care Deals

Avincis Mission Critical Services Ltd acquired Scandinavian Air Ambulance AB for a consideration of €75m. Avincis is a UK-based provider of aerial transportation services for operations such as medical emergency, civil protection, search and rescue and other mission critical services. Scandinavian Air Ambulance provides emergency medical services in Sweden and Finland.

Target Healthcare REIT acquired two Bondcare care homes for a consideration of €18m. Bromford Lane and Beechdale Manor are care homes in the UK that provide residential, nursing and dementia care. Bromford Lane also offers specialist high dependency care services.

MMI Holdings, the South African-based financial services group, acquired CareCross Health Group for an undisclosed amount. CareCross is one of the biggest primary care providers in South Africa.

Assura Group Limited acquired 28 UK medical centres from Ray Seymour and Alistair Blacklaws, the founders of the MP Realty Holdings Group, for an estimated consideration of €134m. Assura is a UK REIT and leading primary care property investor and developer.

G Square, the UK-based private equity firm, acquired Tracscare Group Ltd from Sovereign Capital Partners LLP for an undisclosed amount. Tracscare is a UK-based company that provides support and care for adults with complex needs associated with acquired brain injuries, autistic spectrum disorders, mental health illnesses and both learning and physical disabilities.

Priory Medical Group Ltd acquired Abbey Medical Practice for an undisclosed amount. UK-based Priory Medical provides a broad range of NHS and private clinical services. Abbey Medical is a UK general medical practice.

Cambian Group plc, the UK providers of specialist services in education and care, mental health and learning disabilities, acquired Mencap’s three further education colleges based in the UK, for an undisclosed amount. They provide specialist learning environments for young people with learning disabilities, autism, profound and multiple learning disabilities and complex health and behavioural needs.

Benjamin Lodge acquired Holyrood House for an undisclosed amount. UK-based Benjamin Lodge provides care to individuals aged 18 to 65 with mental health issues. Holyrood is a UK-based care services company.

 

Pharma & Biotech Deals

H. Lundbeck A/S (Lundbeck), the Danish international pharmaceutical company, acquired Chelsea Therapeutics International Ltd for a consideration of €481m. Chelsea Therapeutics is a US biopharmaceuticals research and development services company.

Simbec Research Limited, the UK-based contract research organisation, has merged with ORION Clinical Services Ltd in a €15.7m deal. ORION is a UK-based clinical development organisation and provides drug development services.

Hyperion Therapeutics Inc acquired Andromeda Biotech Ltd for a consideration of €425m. Hyperion Therapeutics is a US-based commercial stage biopharmaceutical company. Based in Israel, Andromeda Biotech is a company focused on the development of an innovative treatment for autoimmune diabetes.

Ceva Sante Animale S.A., the global veterinary pharmaceutical company based in France, has acquired the company in a management buyout transaction, backed by Temasek Holdings Pte Ltd, a Singapore-based private equity firm, and CDH Investments, a China-based private equity firm, for an undisclosed amount.

4D Pharma plc acquired a further 37.5% stake in GT Biologics Ltd, for a consideration of €1.5m. 4D Pharma is a UK pharmaceutical company. GT is a UK-based gut microbiology and immunology research services company.

Roche Holding AG, the listed Swiss global healthcare company, acquired Genia Technologies for a consideration of €262m. Genia is a US-based company developing a single-molecule, semiconductor based, DNA sequencing platform using nanopore technology.

Finance Wales plc and Oxford Capital Partners LLP, the UK-based private equity and venture capital firms, have acquired an undisclosed stake in BioMonde Limited (ZooBiotic), for a consideration of €4.4m. BioMonde is a UK-based company that develops, manufactures and markets larvae products for the treatment of chronic infected and necrotic wounds in humans and animals.

 

Medical Equipment & Supplies Deals

Kerr Corporation, the US manufacturer of dental products, acquired DUX Dental and Vettec Inc for an undisclosed consideration. DUX Dental is a US manufacturer and distributor of high quality dental products. Vettec Inc is a US provider of animal healthcare products.

Hanger Inc acquired Prosthetic Laboratories Of Rochester Inc, a US-based orthotics and prosthetics manufacturer, for an undisclosed consideration. Hanger is a US-based company that provides prosthetic and orthotic products and patient care services.

STENTYS SA acquired Cappella Peel Away Inc for an undisclosed consideration. STENTYS is a France-based medical technology company, commercializing in Europe the world’s first and only Self-Apposing® Stent to treat acute myocardial infarction (AMI). Cappella Peel Away, based in the US, is a catheter developer.

Clinisord SA acquired Audionorte SL for an undisclosed consideration. Clinisord SA is a Spain-based company providing solutions in the field of hearing health. Audionorte is a hearing aid retailer, also based in Spain.

Irish sales, marketing and distribution group DCC Healthcare Ltd acquired Williams Medical Supplies Ltd for a consideration of €56m. Williams Medical is a UK medical and pharmaceutical products supplier.

Henry Schein Inc acquired Sirona Direct for an undisclosed consideration. US-based Henry Schein is the world’s largest provider of health care products and services to office-based dental, animal health and medical practitioners. Sirona Direct is a France-based dental equipment supplier and distributor.